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BUSINESS PLANS

The Best (Way)laid Plans

Here's an Inc. 500 CEO who found that focus, fearlessness, and flexibility work better than a business plan.
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Percentage of Inc. 500 CEOs who started with business plans: 44.8%

It's what makes running a start-up so exhilarating: that constant pressure to reshape the business as your casual assumptions bump up against the real world. Formal business plan? The only tools you need are your focus, your fearlessness, your flexibility.

Oh, and should those fail you, there's one other option: get really desperate. Once you're in that condition, you may begin to understand how David L. Woo transformed an unanswered phone call into what became the Automatic Answer (#39). Back in 1988 Woo and his two partners--all graduate students at the University of California--were getting ready to shut down a computer consulting firm they had founded, having chewed through their $25,000 in financing.

Then came the call: a customer had an urgent question about his computers. Nobody was in the office, but the voice-mail system beeped Woo. When he returned the call immediately from the road, the customer expressed amazement. What was this system that could not only record messages but also tug at Woo's shirtsleeve many miles away? Could Woo install one for him, too?

In the split second it took Woo to respond, a new business formed in his mind. He quickly tracked down the manufacturer of the voice-mail system. "We called and said we had a customer for them," he says. Woo also proposed that he and his partners become a dealer for the manufacturer in southern and central California.

For Woo, the chief executive, the transformation from consulting company to voice-mail seller and installer turned out to be only the first of several he would engineer. Two years later the company's sales tumbled from $800,000 to $400,000 because, Woo says, the two manufacturers he represented fell behind the competition. Automatic Answer could have signed on with other manufacturers, but the partners saw that their position would not be appreciably different: their success would still depend too much on third parties. "We weren't comfortable with that," Woo says.

The solution: design voice-mail systems of their own. As the three cofounders wrote the programs, they piled on debt. One of them, Siamak Emadi, borrowed $200,000 on a collection of personal credit cards. "It was pretty bleak," says Woo. The turning point: the company found equipment manufacturers that would buy the systems and then sell them under their own names.

But Automatic Answer wasn't through with its metamorphosis. In late 1995 Woo decided to diversify by selling the company's voice-mail system under its own brand name, Amanda. Sales of Amanda represented 25% of the company's $8.8 million in revenues in 1995, and that figure will soar to about 50% in 1997.

Not that Woo likes to plan that far ahead.

Last updated: Oct 15, 1996




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